Los Angeles County has sued State Farm for alleged unfair business practices in the company’s handling of insurance claims filed by policyholders affected by the January 2025 Eaton and Palisades fires.
The lawsuit claims that State Farm violated California’s Unfair Competition Law relating to delays, underpayments and denials of wildfire claims. It alleges that State Farm subjected its policyholders to false advertising that induced them to purchase and rely on State Farm Insurance, unreasonable delays in the investigation and processing of claims, systematic underpayments of claims, frequent and improper reassignment of individual claim adjusters and illegal suppression of smoke damage claims.
“State Farm General strongly disagrees with Los Angeles County’s characterization of our wildfire claims response,” State Farm said in a statement to the LA Downtown News “We will review the lawsuit and respond through the appropriate legal process. Wildfire survivors deserve support, clear answers and a fair claims process.”
The lawsuit also claims that State Farm had systematic barriers in place to inhibit policyholders’ ability to contact and communicate with adjusters, refused to provide due compensation for Additional Living Expenses and made misrepresentations during the claims process to discourage pursuit of claims.
State Farm is California’s largest private insurer with over 2.8 million residential and commercial policies statewide. Additionally, a January report by the nonprofit Department of Angels indicated that State Farm customers have much higher dissatisfaction rates than customers of other insurers. A July report by the same nonprofit indicated that State Farm customers continue to experience challenges in claim denials, low claim estimates and communication.
“Wildfire survivors have already endured unimaginable loss; they should not have to fight their insurance company simply to receive the benefits they paid for and counted on,” said Los Angeles County Supervisor Kathryn Barger. “These delays, underpayments and denials have real consequences. They keep families from rebuilding, prolong displacement and ultimately slow the recovery of entire communities.”
The lawsuit said that third-party surveys found widespread frustration with State Farm’s treatment of claims. The lawsuit is seeking restitution to impacted State Farm policyholders, injunctive relief and civil penalties of up to $2,500 per violation. In its statement, State Farm said that the company cooperated fully with the review of its wildfire claims response.
“Our focus remains on helping customers recover,” State Farm’s statement continued. “State Farm has paid more than $6.2 billion on claims related to the 2025 Los Angeles wildfires, including approximately $1 billion for smoke-related damage and has closed about 78% of claims.
“We continue working directly with customers whose claims remain open and evaluating each claim based on the facts of the loss and the coverage provided by the customer’s policy,” it continued.